One disadvantage in the public service sector is that it is hard to gauge efficiency. Profit per staff member or procurements (projects) won can be determined, but there are too many factors not under the organization’s control that influence this variable. So what does efficiency in the nonprofit sector mean?

Over the last few years I have been involved in an experiment; spearheaded by the International Committee of the Red Cross (ICRC), the Program for Humanitarian Impact Investment developed a single indicator in order to determine whether social investors will see a return on their investment or not. The ratio is a formula that includes hours of work, per staff category, to make various orthopedic devices and total work hours per week. If people actually work a full workweek and produce many (quality) devices, the value of the indicator goes up. If people don’t, it goes down. By the way, all the variables involved in this calculation are within the sphere of influence of the rehabilitation center itself.

Read more about this here on the LeaderNet website